Question

Paulis Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During February, the kennel budgeted for 4,100 tenant-days, but its actual level of activity was 4,080 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February:
Data used in budgeting:
Fixed element per month Variable element per tenant-day
Revenue -- $30.60
Wages and salaries $3,100 $6.60
Food and supplies 500 11.40
Facility expenses 8,100 3.60
Administrative expenses 7,900 0.60
Total expenses $19,600 $22.20
Actual results for February:
Revenue $107,880
Wages and salaries $23,510
Food and supplies $36,791
Facility expenses $19,260
Administrative expenses $9,142
1. The net operating income in the planning budget for February would be closest to __________.
Multiple Choice:
O $14,840
O $19,083
O $14,672
O $19,177

Answer 1

Answer:

$19,083

Explanation:

Base on the scenario been described in the question, revenue per tenant-day $29.90Total variable expense per tenant-day 20.00 Contribution margin per tenant-day $9.90 Total fixed expense$17,600Net operating income = ($9.90 × 3,400) − $17,600 = $19,083